Chancellor’s Dividend Change Will Hurt Family Firms

13th March 2017

The Institute for Family Business (IFB) has called on the Government to reverse the change to dividend allowances announced in this week’s Budget. IFB has warned that the Government’s decision to cut the dividend allowance will disproportionately impact family businesses, and risks investment in future growth.

On Wednesday the Chancellor announced his decision to more than half the Dividend tax-free allowance, from £5,000 to £2,000 a year.

IFB Executive Director Elizabeth Bagger said:

“At a time when business is looking for stability and confidence to invest, this decision sends a worrying message to those running family firms.

“This measure disincentives’ taking a risk and starting a business, because the modest financial rewards are being reduced whilst the significant risks remain unchanged. This undermines the Government’s own ambition to make the UK the best place in the world to start and grow a business.

“Owners of family businesses won’t be able to take advantage of the increased ISA limit to offset this change. Shares, particularly minority stakes, in family businesses are illiquid assets. For small businesses in particular, their family business is their investment for their future, and that of their family.”